The on-premise walls are crumbling. Microsoft's Office Web Apps are now in public technical preview - though currently for US customers only - which means that users can now create, edit and view Office documents using only a web browser.
The applications are not yet feature-complete, so Word and OneNote documents are read-only in this preview, but it is still a significant moment. If even Microsoft Office is becoming a web application, surely that shows how all software is heading in that direction?
Microsoft is anxious that we should not draw that conclusion. The reason, Microsoft says, is that desktop Office remains the norm. "We think the vast majority of times people still sit in front of a computer and still tend to use rich client software that runs on the desktop," says product manager Chris Adams. "However there are scenarios where being able to access things through a browser and also on a mobile device are really useful."
If that sounds unenthusiastic, it is easy to see why. You cannot expect the Office team to jump and down saying, "Great news! you no longer need Office!" - the business that generated $18.9 billion in revenue in the year ending June 30, 2009.
On the other hand, neither can Microsoft afford to sit back and watch the likes of Google Apps and Zoho take its business, particularly with alarming reports like this one from Accredited Supplier, stating that 13% of small businesses intend to switch to Google Apps, and 62% prefer business applications that work through a browser.
The outcome of these twin, conflicting pressures is Office Web Apps; and from we have seen so far, they are pretty good. They work in Firefox and Safari as well as IE, retain a familiar Office look and feel, and support collaboration including simultaneous editing in Excel and OneNote.
The Silverlight plug-in has a role for the best fidelity viewing, but it is not required. There is a free ad-supported offering hosted on Windows Live, and paid-for options include both Microsoft and on-premise hosting. Office Web Apps are in part a feature of SharePoint, ensuring businesses remain hooked to Microsoft even if use of desktop Office declines. The on-premise option will be attractive to organisations which are wary of swallowing the entire cloud computing pill.
The question is whether Microsoft really has the vision for this. Back in the Nineties, Microsoft established Office first by making it a suite with a common user interface, and then by introducing Office automation, based on COM and Visual Basic for Applications. Although it was slow and clunky to begin it, the potential for improving document productivity by integrating multiple applications was huge.
Today, the Internet is the network, and HTTP combined with web services enables a level of integration and collaboration that goes far beyond what is possible with desktop Office. It is difficult for Microsoft to grasp these opportunities while still promoting on-premise SharePoint and Office as its primary solution. Where is the risk-taking company that pushed competitors aside in the early days of Office?
Nothing will touch Microsoft Office on the desktop now; even the free Open Office has had little impact. The transition to the web is more tricky, and Microsoft will need more conviction than it has so far displayed to beat its younger rivals online.